GUEST COLUMN
HOUSING’S ‘PERFECT STORM’ HITS SAN DIEGO

Conditions are right, and the ‘perfect storm’ has hit the San Diego real estate market.

Re-sales of single-family homes in San Diego closed out an epic month in May. The overall median price in May rose 3.2 percent from a year ago, to $335,000. Sales in San Diego jumped 21.5 percent from one year ago. After years of declining real estate values, San Diego appears to have hit bottom and is now turning up. With 30-year mortgages averaging a lifetime low rate of 3.8 percent fixed and 2.74 percent adjustable, we are now witnessing the perfect storm for the best home affordability in many years.

Better trim those sales … homes are moving faster on the market with the median number of days it takes to sell a single family home dropping to a quick 46.6 days in May. However, it’s not all smooth sailing; while the market is coming back to life due to low interest rates and a slowly improving economy, the low inventory of available homes for sale is becoming a critical issue.

San Diego normally enjoys a six-to seven-month inventory of homes for sale, but today, inventory levels are at record lows — closer to three- to 3.5-month of housing supply. This means that multiple offers are becoming more and more prevalent. Although this scenario is good for sellers, it’s not a situation that is good for buyers.

While home affordability is fantastic, this is a perplexing reality for would-be home buyers as increased competition and multiple offers are proving to be a tough obstacle to that much wanted, and long awaited home purchase.

“Buyers who want an advantage in the bidding process will need more than a mortgage prequalification. They will need a pre-approval,” noted Shayne Flaherty, vice president of Penny Realty Inc., and RE/MAX Coastal Properties. According to Shayne, the difference is significant. Prequalifying for a mortgage is based solely on what you disclose to the loan officer or broker about your earnings, credit score,and total assets. A pre-approval, by contrast, requires borrowers to provide documentation of their income and their assets. Timing is also important and Shayne says in today’s competitive market, it’s a good idea to have a trusted and experienced real estate professional by your side to help you chart your course.